Whether cryptocurrency will replace real currency very soon is still very much up for debate. However, just because it may take some time to be taken seriously doesn’t mean the developments surrounding digital currency should fall off your radar altogether.
There are big movements afoot that could change the status quo, despite the obstacles that appear in the way of some digital currencies being launched.
A few high-profile bow-outs ahead of Facebook’s launch of its cryptocurrency Libra means that China may be at an advantage. Both Facebook and China are looking to create their own digital cryptocurrency would could be gamechangers – particularly for developed countries.
We recently wrote about Facebook launching its own cryptocurrency and you can read more about here. Reports say that Libra will be backed by the U.S. dollar, euro and yen. But the planned 2020 launch has just hit stumbling blocks as several members of the project backed out including Visa, Paypal, MasterCard and Stripe. There are now concerns about whether Facebook will be able to orchestrate a successful launch of Libra next year, or at all.
China, meanwhile, has announced it will create its own digital currency backed by the Yuan. It’s not certain when People’s Bank of China will release its own digital currency but a report by Bloomberg says that it’s “close” to doing so.
Whether there’ll be international acceptance and investment into China’s offering is another matter though. It doesn’t help that there’s already major tensions between China and the West (particularly America) and this will be one of the many reasons why China’s offering will be met with some skepticism.
Satoshi Nakamoto (we still don’t know if it’s a ‘he’, ‘she’ or a ‘they’) introduced Bitcoin back in 2008 and one of the intentions was to decentralise finance. In other words, to strip down control of government and banking forces and put the power of handling money into the people’s hands.
However, China’s cryptocurrency, say experts will have the opposite intention. China wants to give Beijing more control over the financial system and give it powers to control crime such as money laundering.
The fascination surrounding the decentralisation of finance is gaining pace because of its many benefits. Cryptocurrencies enable users to send funds around with ease and secure capital for business.
That’s not to say that owning cryptocurrencies is an easy endeavor. Mining cryptocurrency is an exercise that few understand. Storing it and keeping it safe poses many problems as well.
Criminals have taken advantage of the benefits of digital currencies too. They typically use Bitcoin to launder money, while hackers have been known to ask to be paid ransom in digital currency as it can’t be easily traced.
Fraud is rife too. Just recently an online Bitcoin investment platform claimed that Jeremy Clarkson, Sir Alan Sugar and Simon Cowell all back it. But all have told This is Money that they aren’t backing this ‘investment’ with Clarkson labelling it a scam.
Cryptocurrencies have been used with good and bad intentions. With such momentum in the cryptocurrency space it’s become clear to investors and governments that they can no longer afford to sit on the sidelines. As pointed out by visualcapitalist.com recently, regulations are being slowly introduced to get back control. Some countries are further ahead or even stricter in their pursuit of digital currency regulation. Some don’t even recognise this type of money as legal tender.
But as more enter this space there are bound to be more business opportunities. If Facebook’s pursuit of creating an accessible cryptocurrency for all to trade with does see the light of day there’s bound to be a flurry of activity as China and other more established currencies evaluate the potential disruption and find a way to compete. As the cryptocurrency market matures there’s no doubt that the insurance industry will have a big part to play. It just has to decide exactly how much of that role it wants to take on.